Online House Hunter: 2012 housing predictions

I ONCE worked for the Spiritualist newspaper Psychic News (pauses for everyone to say the “I knew you were going to say that” joke). It was, curiously, about the only newspaper where you could not read predictions. This surprised many people as they assumed that was the bread and butter of such a newspaper. The “Do you sub next week’s racing results” was the second ‘original’ joke people always fired at me.

But the paper burnt its fingers on predictions in the summer of 1939. There was, at that time, rumours of a war with Germany so editor Maurice Barbanell polled numerous mediums (or more correctly, their spirit guides) to find out if there would be a war. With only one exception, they all said the rumours could be dismissed. And so in August 1939, Psychic News ran with the front-page headline: “There Will Be No War”. And a few weeks later – as Britain went to war – Mr Barbanell declared spirit guides may provide proof of life after death but they could no more predict the future than mere mortals. He therefore banned predictions appearing in the paper.

Fortunately, for those in the housing market the gurus and mystics have no such qualms about foretelling what 2012 holds. So here’s a round-up of The Independent property soothsayers…

Robin King, director for Move with Us, sees the increasing divide between the haves and have-nots growing in 2012 and says “Those who are able to will continue to de-leverage using lower interest rates to pay off substantial chunks off their mortgages. People in arrears will continue to suffer as they see the value of their asset eroding while struggling with the higher cost of living and job uncertainty.” But while he sees the housing market nationally remaining flat he says there will be hotspots: ” Canterbury has become an appealing place to live as the new high speed link into central London makes it a very desirable, historic city with access to the coast and the continent. Cambridge and central Oxford are also ones to watch as we expect that they may also experience slight house price increases as they have an undersupply of housing and a highly skilled workforce to house, plus high employment figures.”

Rightmove asked the public themselves for their predictions and generally found them an optimistic bunch. Two-thirds of those surveyed don’t expect their house price to fall over the next 12 months. Rightmove’s Consumer Price Forecast surveyed more than 25,000 people and the majority of those ‘price pessimists’ who expected a fall put the blame on the UK economy. Not surprisingly there are large regional variations – see their full report at:

Peter Bolton King, chief execuctive of the National Association of Estate Agents, is – perhaps hopeful for 2012 and predicts a gradual recovery for the housing market. However, before you get too excited, he adds: ” It is unlikely we will see any great upturn to help the market back to full capacity. It is likely that property transactions will remain at a similar level to that in 2011.” And he sees continuing gloom for those would-be first-time buyers: “Next year will see a continued lending barrier facing those entering the housing market for the first time, with major lenders sticking to tight mortgage policies. Clearly, when the Stamp Duty holiday disappears in the second quarter of 2012 it will become even more difficult for first time buyers to access the market.” In case his predictions go awry, he hedges his bets by saying confidence will be a key factor and that – to some extent – will be driven by the media.

It is economist Martin Ellis who gets the crystal ball out of the cupboard at Halifax’s headquarters. He points out “The housing market has proved highly resilient in recent months despite the weak economic recovery and the significant deterioration in the outlook for both the UK and global economies.” A fair point and one many doom merchants overlook. However, he predicts only “broad stability” on house prices in 2012. He points to the imbalance between supply and demand should help support house prices over medium and longer terms. For 2012 though, he sees fears over the economy and job security as deterring people joining the housing market.

And as for the rental market, Jonathan Moore, director of Easyroommate, is expecting the flatsharing sector to boom as entry into the housing market remains elusive for most people. He predicts the UK flatsharing population to grow by 105,000 in 2012, reaching 2.96m. And average room rents he sees increasing by five percent to £383 per month.

We’ll be able to check back in 12 months and see who’s the Mystic Meg and who’s the failed spirit guide!

The government and the Estate Agents have an interest in talking up house prices. The Land Registry site shows that the average house price has dropped by over 3% in the past year, and by as much as 1% in October, so how can they say that house prices are resilient, particularly when inflation is running at 5%.